Home loan primarily caters to first-time home buyers who through the financing facility are able to buy their dream house. Nonetheless, as it comes with a long-term commitment (repayment tenure is usually more than 10 years) you need to be financially disciplined in order to repay the loan in full and on time. Not just you need to be cautious through the term of the loan, but even as you close the loan by repaying the final outstanding installment, you need to consider some of the important points discussed below:
1. Obtain original documents from the bank or financing institution:
Before processing your home loan application, financial institutions require you to complete a number of formalities. You might have also submitted a number of original documents with the financing company such as indemnity paper, property deed etc. that upon closure of the loan account needs to be obtained back.
Also, in case the bank defaults in returning you the originals, you can take legal recourse against the bank and seek compensation for the loss. In the recent past, there have been reported cases where banks lost original property documents of borrowers which were hypothecated for the loan approval.
2. Check loan closure status is updated with the credit bureaus:
As a healthy credit score is a prime requirement before any loan application gets through, you need to ensure any change in any of your credit account is updated at the earliest with the credit bureau. Usually, it takes 30 days time for the updated status to reflect in the credit report. So, after you repay your outstanding home loan, check your credit report after 30 days and in case if any discrepancy arises, you need to approach your bank at the earliest for corrective steps.
3.Property should not have a lien on it after you have cleared the loan:
In some of the cases, banks in order to reduce the risk element, put the property on lien. And so after you have closed the loan account, make it a point to get it removed with the help of bank representatives at the local registrar’s office.
4. Secure encumbrance certificate from the registrar office:
Even after you get the lien removed from you property, you need to secure a new encumbrance certificate from the local office of registrar. Encumbrance certificate basically shows all of the financial transactions that took place against your property and if there is still any outstanding amount that needs to be paid.
5. Obtain No objection certificate:
Also obtain NOC from your bank which clearly states that the bank no longer has any interest or claim on your property and it is debt free as the loan account has been closed on the mentioned date. Ensure that all of the details such as name of the borrower, property location, loan account, loan date, closure date etc. are mentioned correctly on the certificate.